Saturday, January 28, 2023

Credit Suisse misses analyst expectations with a 38% fall in net profit


A Swiss flag flies over a sign of Credit Suisse in Bern, Switzerland


LONDON — Credit Suisse on Thursday posted a 38% slide in net profit for the third quarter, as the coronavirus pandemic and “significant” foreign exchange headwinds weighed on the bank’s earnings.

Net income attributable to shareholders came in at 546 million Swiss francs ($600 million), below the 679 million Swiss francs that analysts had expected, according to Reuters Eikon.

It marks a 38% slide from net income in the third quarter of last year, although the bank’s results during that period were bolstered by the sale of its InvestLab fund platform to the Allfunds Group.

In the second three months of 2020, net income was 1.16 billion Swiss francs.

“Despite the Covid-19 pandemic and significant foreign exchange headwinds due to the strong Swiss franc, our performance in the first nine months of this year has been strong,” Thomas Gottstein, CEO of Credit Suisse, said in a statement.

Other highlights for the quarter:

  • Net revenue dropped 2% to 5.2 billion Swiss francs from 5.3 billion Swiss francs a year ago;
  • CET 1 ratio (a measure of bank solvency) reached 13% from 12.4% a year ago.

Net revenues at Credit Suisse’s investment banking division rose by 11% in the third quarter from a year ago, on “constructive” market conditions and higher client activity, mainly in Asia. Fixed income sales and trading revenues grew by 10% year-on-year, while equity sales and trading revenues increased by 5%.

However, in its wealth management division, strong transaction-based revenues were more than offset by lower fees and net interest income. Revenue at the closely-watched division fell 10% year-on-year.

Going forward, the Swiss bank said it expected momentum in its investment banking arm to continue.

“We would expect this environment to continue to result in elevated levels of transactional and trading activity, across both our wealth management and investment banking businesses, as our clients respond to the macroeconomic uncertainties,” the bank said in a statement.

Credit Suisse added that it was planning to pay out the second tranche of its 2019 dividend and resume its share buyback program in January, with the aim of repurchasing between 1 and 1.5 billion Swiss francs of shares for the full year.

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